Norwegian Air may close subsidiary in Argentina
In six months of operation, airline accumulates losses that need to be reversed until August, said the company’s CFO
One of the largest low-cost airlines in the world, Norwegian Air is feeling the bitter taste of operating in South America, a continent known for countries with unstable economies. Its operation in Argentina, which debuted last year under high expectation, has been in the loss for months and without signs of recovery.
Facing the negative result, the group’s chief financial officer, Geir Kalsen, told the Norwegian press that the Argentine subsidiary has until August to reverse the situation and become profitable. “If our project in Argentina does not correspond to the plan, we are prepared to withdraw,” said the CFO.
Norwegian Air was unlucky to debut in Argentina at a bad time, with the country in recession. But the Norwegians also had the discomfort of finding a sector that, after an abrupt opening, began to gain new competitors quickly. In this context JetSmart from Chile and Flybondi, compete for passengers with aggressive strategies that include prices considered incompatible with costs. As a result, the Norwegian occupation of the Norwegian airline is well below expectations.
Boeing 737 back to Europe
The scenario does not look like what the Norwegian believed he would find when he made his debut in Argentina. After delaying start-up operations, the company received four Boeing 737-800 leased, but eventually sent one to Europe to compensate for the grounding of the 737 MAX model used by the Norwegian parent company.
If you decide to leave the Argentine market, at least Norwegian Air must remain with the flight between Buenos Aires and London, a route that marked the company’s debut on the continent. Currently the company also flies to Rio de Janeiro, departing from Gatwick airport.